Is Amway A Pyramid Scheme?
Is Amway A Pyramid Scheme
This is the grand daddy of all mlms. This is where it all started and where most people all go back to when something is wrong in the industry.
Amway was founded in 1959 by Rich Devos and Jay Van Andel. It has ranked #1 in the MLM industry for years and years. In 2021 it had $8.8 Billion in revenue from operations in over 100 countries.
Begs the question….how can this be a pyramid scheme?
Let’s look again at what is a pyramid scheme:
1.) High up front cost and inventory loading
2.) Get paid for recruiting new members
3.) No retailing of goods/services or no product at all
In this article regarding Amway, we will address these quickly so we can get to some other important items.
1.) It costs $100/year to be an Amway IBO (independent Business Owner)
2.) There are no inventory requirements at all
3.) You do not get paid to recruit. You get paid based on volume of activity
4.) You can retail many products/services
Conclusion: Amway is not a pyramid scheme.
The famous Amway lawsuit was brough by the FTC (Federal Trade Commission) in 1979.
I do not think many people really read the actual lawsuit. Maybe just summaries. The understanding that most people have is that the FTC was claiming Amway was a pyramid scheme. It is much more than that. In reading the lawsuit, I came away with these items:
1.) Amway was accused of price fixing and price manipulation
2.) Amway was accused of restraint of trade
3.) Amway was accused of unfair business practices
4.) Amway was accused of operating a business model that would collapse upon saturation (no mention of a pyramid yet)
5.) Amway and it’s members were accused of making false and misleading claims regarding the business
In the whole lawsuit, the word pyramid never appears! Imagine that.
Finally, a mention of the pyramid rules. This is outside of the actual “counts” that they are being accused of.
1.) Amway has had an inventory buy back policy since it’s inception – good thing to have
2.) Amway has a 70% rule to avoid distributors purchasing their ranks. A distributor has to resell at least 70% of what the personally buy.
3.) Amway has a 10 customer rule in place. The suit says that Amway direct distributors enforce it, but I was in Amway for 5 years and I never got asked. Opps!
Well, the bottom line is that Amway was deemed to NOT be a pyramid scheme.
All the other stuff was just that. Stuff. Just like any other frivolous lawsuit. You throw up all you can against a wall and something may stick. Well, not in this case.
Unfortunately for Amway, this lawsuit was just the beginning of many to come. The main reason is just stupid distributors that will say anything to recruit someone. I saw the desperation, the begging, and deception. Does that mean you fall for it?
Do your due diligence!
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